Someone must draw the short straw. And in the case of the One Big, Beautiful Bill’s student-loan-related provisions, that someone appears to be the parents of lower- and middle-income families.
The Trump Administration’s massive budget reconciliation bill — law of the land as of July 4 — will reshape how parents help to pay for college, for years to come. That’s due to major shifts in how much you can borrow in federal Parent PLUS Loans and how you can repay them, including pathways to forgiveness.
|
Parent PLUS borrowing before the BBB |
Current Parent PLUS borrowers |
Future Parent PLUS borrowers |
|
|
Loan limits |
Up to your student’s cost of attendance |
Up to your student’s cost of attendance for three more years — if you first borrowed before July 1, 2026 |
$20,000 annually, $65,000 total |
|
Repayment plans |
Standard, Graduated, Extended or Income-Contingent Repayment (ICR) if part of an Federal Direct Consolidation Loan |
Standard, Graduated, Extended — or Income Based Repayment (IBR) if you consolidate by June 30, 2026 |
Standard |
|
Forgiveness options |
PSLF and ICR |
PSLF and IBR — if you consolidate by June 30, 2026 |
Neither |
Whether you’re a current or potential borrower of federal student loans, click to the section below that most impacts your family’s college financial plans.
Why did conservative lawmakers target Parent PLUS?
PLUS Loans have long been under fire, but reshaping parent loans specifically may be an attempt, at least in part, to save parents from themselves. Consider that nearly 4 million American seniors still have education debt, and that’s to say nothing of middle-aged moms and dads who are also burdened by education debt, their own and potentially their children’s. Part of the argument from the OBBB authors: Lower the loan limits and make Parent PLUS Loans less attractive, and fewer parents will find themselves in rough financial shape in the future.
3 takeaways for current Parent PLUS Loan borrowers
If you’ve already borrowed these federal loans, this section is for you (even if your student is still enrolled).
1. If your student is still in school, understand the impacts of continuing to borrow
Fortunately, your current loan limit could be grandfathered in: If you take out a Parent PLUS Loan for your student’s first year of college before July 1, 2026, you have an additional three years of uncapped borrowing (or until they complete their program, whichever is shorter), says National Association of Student Financial Aid Administrators (NASFAA) policy analyst Sarah Austin. (If your student is still enrolled after the three-year mark, you will be subject to the new, lower limits.)
Unfortunately, if you borrow additional Parent PLUS Loans after July 1, 2026, your current PLUS Loans won’t be eligible for income-driven repayment. The workaround, which we’ll detail later, is through consolidation in the very near future. If you turn your current PLUS Loans into a Direct Consolidation Loan before that summer 2026 cutoff, they will retain eligibility for ICR and, after its sunset, IBR.
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2. If you want access to lower monthly payments and forgiveness pathways, consider consolidating soon
A student loan repayment loophole is set to expire on July 1, 2026 (or really next spring, since consolidation can take weeks to months, particularly on the Trump Administration’s timeline). If you consolidate your Parent PLUS Loans by that doomsday date and switch to ICR, you’ll be moved to IBR by July 1, 2028, and maintain access to Public Service Loan Forgiveness (PSLF). Crucially, this lets you keep the option of getting a lower monthly payment. Plus, you can receive relief on your outstanding balance, either:
- After 10 years of qualifying payments toward PSLF (if you work for an eligible nonprofit or government employer).
- After 25 years of qualifying payments toward IBR (including progress you might have made on ICR. ICR will be sunset by July 1, 2028, and is caught up in the SAVE Plan court action).
Wait, what about the new Repayment Assistance Plan (RAP)?
In yet another sign that parent borrowers are the most slighted by forthcoming Federal Student Aid changes, they’re not eligible for RAP.
3. Taking action now could make repayment easier later
Parent PLUS Loan repayment has always required dodging snags, and the Big Beautiful Bill doesn’t change that. Proceed, but with caution.
- If your child is still in school: Understand the maximum three-year clock on continued PLUS Loan borrowing — and how your post-summer 2026 borrowing will impact your repayment plan options. If you’re skittish about repaying a PLUS Loan without the option of income-driven repaymet, for example, you might adjust how you and your family plan to pay for school.
- If you want to maintain access to IDR and forgiveness options: Consider the consolidation loophole described above. Just be mindful of those snags: Consolidating can cause you to lose certain features of your current loans. Talk to your federal loan servicer about what you’d be giving up, not just what you’d gain.
4 takeaways for future Parent PLUS Loan borrowers
If you have a child or children going to school in the future, and you might rely on federal student loans, this section is for you.
1. Prepare for the program’s newly lowered loan limits
No longer can parents (and grandparents who legally adopted their students) borrow up to their child’s school-certified cost of attendance, minus other received aid.
And now, there’s a potential trap in the new loan limits: You can borrow up to $20,000 per year, but only $65,000 overall. If you rely on PLUS Loans for your undergraduate’s four-year degree and max out at $20,000 in each of the first three years, you’d only have $5,000 left for their senior year. (Loan caps on student borrowing could especially impact minorities and low-ranked law schools, Reuters reports.)
2. Before you borrow: Confirm the affordability of ‘standard’ repayment
If you borrow a PLUS Loan after July 1, 2026, you’re limited to the Standard Repayment Plan and nothing else. And as higher education financing expert and Bankrate contributor Mark Kantrowitz reminds us, because your standard loan term is now decided by your loan amount, you’ll be limited to terms of 10, 15 or 20 years.
| New standard | Old standard | ||
| Loan amount | Term (years) | Loan amount | Term (years) |
| Under $25,000 | 10 | Any | 10 |
| $25,000 to $50,000 | 15 | ||
| $50,000 to $100,000 | 20 | ||
| Over $100,000 | 25 | ||
“These terms are shorter than under the previous extended repayment plan, so the monthly payment will be higher,” Kantrowitz adds.
In plain English: If you have a tight budget, be wary of signing up for a PLUS Loan. You can use a student loan calculator to determine what payments could look like and whether they fit into your family budget.
3. Don’t plan on parent loan forgiveness, at least from Uncle Sam
The OBBB removes the possibility of PSLF or IDR forgiveness for PLUS Loans borrowed after July 1, 2026. If your child is pursuing a career in public service, keeping their education debt in their own name will maintain access to PSLF.
With that said, if you borrow federal PLUS Loans for your child, you can still seek repayment assistance, just not from the federal government. Consider solutions like employer student loan repayment.
No, the era of student loan forgiveness isn’t over. Here’s why
Mass relief might be out the window, but there are plenty of programs still standing.
Learn more
4. Build a college financial plan that doesn’t hinge on Parent PLUS Loans
Your time horizon affects the plan, of course. If your son or daughter is enrolling next semester, you might be in a rush to compare federal Parent PLUS Loans and private parent loans.
I think we will possibly see an increase in private loans for students and parents of dependent students as well. However, it is important to note that some borrowers who qualify for a Parent PLUS Loan will not be able to qualify for private loans. So, it is entirely likely there will be a gap in funding for certain students. How that gap will be filled is still unknown. It’s possible states or institutions will explore options to fill these gaps. For example, schools may be considering offering institutional loans to students who are not able to borrow a private loan but have already maximized all federal Direct Loans.
— NASFAA policy analyst Sarah Austin
If your kid is closer to a toddler than a teen, on the other hand, you might try to ramp up your income and sock away funds in college savings vehicles.
No matter where you are in your journey, remember that loans — both Parent PLUS and even the best private loans — are a last resort. You and your student can first exhaust every other avenue, including:
In this new world of college financing, taking each of these steps can lessen your reliance on PLUS Loans. You might even be able to avoid them altogether.
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